Compound interest, or "interest on interest", is calculated using the formula A = P (1 + r/n) nt , where P is the principal balance, r is the annual interest rate (as a decimal), n is the number of times interest is compounded per year, and t is the number of years. Compound interest is defined as the interest incurred on a loan or deposit amount of money. It is a familiar concept applied in day-to-day life. The compound interest for the deposit sum is dependent on both the Principal amount and Interest obtained over a period of time. Calculate compound interest on an investment, 401K or savings account with annual, quarterly, daily or continuous compounding. The calculator computes compound interest calculations and shows you the steps including the math. Compound Interest Formula Compound interest is calculated by finding the total amount accumulated over a period of time, based on the initial principal, the rate of interest, and the frequency of compounding.
